Thank you for your reply. I admit the 60$ is completely cherrypicked as I couldn’t find any average value from a reputable source, still I screened many prices from major businesses and it felt like it was a good value since there were many that were much lower as well. It is true that cheaper methods have much shorter sequestration periods, but since these do not scale to global demand they should just be treated as placeholder anyway, until other methods become available. Things like reforestation also generates other types of positive externalities as an added bonus.
I do not consider myself to be exceptionally well read on renewables but I’ve been hearing about PV and wind “exploding” for over a decade now, that makes me skeptical. If it happens I’ll be pleasantly surprised.
I think the rent topic is key to understand the sustainability of the solution. Carbon removal and green energy are expensive, the fact that we can, perhaps, fund them without a tax wedge is important, also from a taxpayer perspective, I want taxes that are fair and don’t distort other economic activities.
I agree that electrification is more or less inevitable in the long run, I am not confident we can achieve it with current technology. France is perhaps the only major western country that managed to fundamentally shift its energy supply, mostly thanks to nuclear; yet, even they remain dependent on fossil for transportation. Maybe light vehicles can switch to electric but for heavy weight transport we need to develop public infrastructure like trains, though that still leaves out water and air transport for which there is no obvious solution (maybe nuclear for water, if it becomes popular/acceptable again).
Yes, the geopolitics of oil are nasty but we are kinda stuck with them until a viable alternative is presented. On this topic I want to point out that “green politics” often end up exacerbating this problem in two ways:
first is their overwhelming opposition to nuclear, and second is their hostility to sourcing oil locally. For example, I live in a major EU country that has enough oil reserves to meet domestic demand, yet their exploitation has been completely halted by politics; so we purchase our oil from places with a considerable track record of human rights violations, a record that we indirectly fund at a premium.
been hearing about PV and wind “exploding” for over a decade now, that makes me skeptical. If it happens I’ll be pleasantly surprised.
I work in modelling energy markets since 10-20y and yes we ‘saw it explode’ since 1-2 decades indeed; it has been rapid exponential growth, and now its a few % of global power (more and more countries going rapidly towards high double-digit %age), and if nothing fundamentally changes, soon a few and then many % of global energy, I see nothing to stop this. My honest strong gut feeling (FWIW!!) is: “OP is a bit late to the trash renewables (RES) party” (again, despite the still slightly humbling graph). 20y ago it started with claims as to how it’d be a physical tautology that RES can’t make a serious dent ever. ‘We’d have to cover this high double-digit share of all agri surface and have wind turbines EVERYwhere’ or things like that. Then they were unaffordable. Then we cannot store them. BUT TODAY, REALLY: really cheap, not so storable anymore, IOT naturally enables a ton of flexibilities; we’re super dumb societally and don’t dare strong dynamic pricing but with that we’d adjust on a whim I’m sure—though this cannot be super well studied without having (i) social scale (ii) long-ish term daring attempts to expose firms, industries, households to dynamic prices. And I don’t have the impression the expansion is just from strong subsidies or something; often it simply seems like a very natural option to go for. Then again, your graph surprised me more than it should so maybe I’m too much in the weeds, in the individual numbers to see part of the big pic.
re tax wedge: The optimal tax vis-a-vis pollution is not 0 but the level that coresponds to the marginal pollution cost, no matter whether some emissions will eventually be CCS-ed or not. There’s anyway no ‘distortion’ as the basic distortion you fear from taxing is ‘qty reduction’ but that’s exactly what’s optimal in the face of a negative externality. Bread shouldn’t cost 0 in the optimum only because somebody (in this case the baker himself but that’s more accidental in terms of discussing optimal prize) bears a negativity (his effort); carbon emissions exactly equally simply shouldn’t cost 0 as broad society bears a negativity. You want taxes as “fair” but I see nothing unfair here.
Btw, I’m fully agreeing we should exactly skim resource extraction rents in a way you describe, not contesting at all. (and interestingly it would also be a very natural & undistortive way to deal with AI creating a lot - a lot from our earth as inputs and the inputs it should pay for so we have lots of public money and thus random people can naturally own much of the eventual produce, even if the AI owners as intermediaries may keep a competitive, incentivizing margin remunerating their contribution)
Thank you for your reply. I admit the 60$ is completely cherrypicked as I couldn’t find any average value from a reputable source, still I screened many prices from major businesses and it felt like it was a good value since there were many that were much lower as well. It is true that cheaper methods have much shorter sequestration periods, but since these do not scale to global demand they should just be treated as placeholder anyway, until other methods become available. Things like reforestation also generates other types of positive externalities as an added bonus.
I do not consider myself to be exceptionally well read on renewables but I’ve been hearing about PV and wind “exploding” for over a decade now, that makes me skeptical. If it happens I’ll be pleasantly surprised.
I think the rent topic is key to understand the sustainability of the solution. Carbon removal and green energy are expensive, the fact that we can, perhaps, fund them without a tax wedge is important, also from a taxpayer perspective, I want taxes that are fair and don’t distort other economic activities.
I agree that electrification is more or less inevitable in the long run, I am not confident we can achieve it with current technology. France is perhaps the only major western country that managed to fundamentally shift its energy supply, mostly thanks to nuclear; yet, even they remain dependent on fossil for transportation. Maybe light vehicles can switch to electric but for heavy weight transport we need to develop public infrastructure like trains, though that still leaves out water and air transport for which there is no obvious solution (maybe nuclear for water, if it becomes popular/acceptable again).
Yes, the geopolitics of oil are nasty but we are kinda stuck with them until a viable alternative is presented. On this topic I want to point out that “green politics” often end up exacerbating this problem in two ways: first is their overwhelming opposition to nuclear, and second is their hostility to sourcing oil locally. For example, I live in a major EU country that has enough oil reserves to meet domestic demand, yet their exploitation has been completely halted by politics; so we purchase our oil from places with a considerable track record of human rights violations, a record that we indirectly fund at a premium.
I work in modelling energy markets since 10-20y and yes we ‘saw it explode’ since 1-2 decades indeed; it has been rapid exponential growth, and now its a few % of global power (more and more countries going rapidly towards high double-digit %age), and if nothing fundamentally changes, soon a few and then many % of global energy, I see nothing to stop this. My honest strong gut feeling (FWIW!!) is: “OP is a bit late to the trash renewables (RES) party” (again, despite the still slightly humbling graph). 20y ago it started with claims as to how it’d be a physical tautology that RES can’t make a serious dent ever. ‘We’d have to cover this high double-digit share of all agri surface and have wind turbines EVERYwhere’ or things like that. Then they were unaffordable. Then we cannot store them. BUT TODAY, REALLY: really cheap, not so storable anymore, IOT naturally enables a ton of flexibilities; we’re super dumb societally and don’t dare strong dynamic pricing but with that we’d adjust on a whim I’m sure—though this cannot be super well studied without having (i) social scale (ii) long-ish term daring attempts to expose firms, industries, households to dynamic prices. And I don’t have the impression the expansion is just from strong subsidies or something; often it simply seems like a very natural option to go for. Then again, your graph surprised me more than it should so maybe I’m too much in the weeds, in the individual numbers to see part of the big pic.
re tax wedge: The optimal tax vis-a-vis pollution is not 0 but the level that coresponds to the marginal pollution cost, no matter whether some emissions will eventually be CCS-ed or not. There’s anyway no ‘distortion’ as the basic distortion you fear from taxing is ‘qty reduction’ but that’s exactly what’s optimal in the face of a negative externality. Bread shouldn’t cost 0 in the optimum only because somebody (in this case the baker himself but that’s more accidental in terms of discussing optimal prize) bears a negativity (his effort); carbon emissions exactly equally simply shouldn’t cost 0 as broad society bears a negativity. You want taxes as “fair” but I see nothing unfair here.
Btw, I’m fully agreeing we should exactly skim resource extraction rents in a way you describe, not contesting at all. (and interestingly it would also be a very natural & undistortive way to deal with AI creating a lot - a lot from our earth as inputs and the inputs it should pay for so we have lots of public money and thus random people can naturally own much of the eventual produce, even if the AI owners as intermediaries may keep a competitive, incentivizing margin remunerating their contribution)